ROCKVILLE, Md.--(BUSINESS WIRE)--Washington Real Estate Investment Trust (“WRIT” or the “Company”) (NYSE:
WRE), a leading owner and operator of diversified properties in the
Washington, D.C. region, reported financial and operating results today
for the quarter and year ended December 31, 2012.

Strategic Initiatives

WRIT announced last month a simplification of its diversified strategy
to focus on office, multifamily and retail assets - committing to a
“live, work and shop in Washington, DC” focus for future investment. To
accelerate this strategy, WRIT announced that it is exploring a 2013
disposition of its 1.3 million square foot Medical Office Division.

“WRIT's 53 year history of successfully owning and operating a
diversified Washington, DC property portfolio has served its investors
well. As we look forward to the next 50 years, we see our strategy of
focusing on the “live, work and shop” assets in urban locations,
typically inside the beltway or near Metro, as the best way to continue
to provide future growth for our shareholders. Keeping future investment
decisions to three divisions; office, multifamily and retail assets, we
simplify our business model and narrow our capital allocation process
while we continue to improve the quality and location of our assets,”
stated John P. McDaniel, Chairman of WRIT's Board of Trustees.

WRIT anticipates capturing embedded value through the potential Medical
Office Division sale, which should provide a lower cost of capital to
continue to improve the quality, age and location of WRIT's properties
in its core office, multifamily and retail sectors. The Medical Office
Division represents the largest portfolio of institutional quality
medical office assets in the Washington, DC region, with all of the
assets in affluent communities or urban centers or near major medical
centers such as INOVA Fairfax, Shady Grove Adventist and George
Washington Hospital.

Financial Results

Core Funds from Operations(1), defined as Funds from
Operations(1) (“FFO”) excluding acquisition expense, gains
or losses on extinguishment of debt, property impairment, and
severance expense related to corporate reorganization, was $1.90 per
diluted share for the year and $0.47 per diluted share for the quarter
ended December 31, 2012, respectively, as compared to $1.95 per
diluted share and $0.47 per diluted share for the corresponding
periods in 2011.

Included in fourth quarter 2011 results was a $0.01 per diluted
share charge related to a lawsuit with a former tenant at
Westminster Shopping Center.

FFO for the year ended December 31, 2012 was $122.5 million, or $1.84
per diluted share, compared to $110.1 million, or $1.66 per diluted
share, in 2011. FFO for the quarter ended December 31, 2012 was $27.7
million, or $0.42 per diluted share, compared to $15.6 million, or
$0.23 per diluted share, in the same period one year ago.

Included in full year 2012 and fourth quarter 2012 FFO is a real
estate impairment of $2.1 million, or $0.03 per diluted share,
which reflects the write-down of WRIT's investment in land at 4661
Kenmore Avenue to its estimated fair market value. Also included
in full year 2012 and fourth quarter 2012 FFO is a severance
expense of $1.6 million, or $0.02 per diluted share, related to
corporate reorganization. Included in full year 2011 and fourth
quarter 2011 FFO is a real estate impairment of $14.5 million, or
$0.22 per diluted share, which reflects the write-down of WRIT's
investment in the office development at Dulles Station, Phase II
to its estimated fair market value.

Net income attributable to the controlling interests for the year
ended December 31, 2012 was $23.7 million, or $0.35 per diluted share,
compared to $104.9 million, or $1.58 per diluted share, in 2011.
Included in 2012 net income are gains on sale of real estate of $5.1
million, or $0.08 per diluted share, and real estate impairment of
$2.1 million, or $0.03 per diluted share. Included in 2011 net income
are gains on sale of real estate of $97.5 million, or $1.48 per
diluted share, real estate impairment of $14.5 million, or $0.22 per
diluted share, acquisition costs of $3.6 million, or $0.05 per diluted
share, and loss on extinguishment of debt of $1.0 million, or $0.01
per diluted share.

Net income attributable to the controlling interests for the quarter
ended December 31, 2012 was $3.0 million, or $0.04 per diluted share,
compared to $30.7 million, or $0.46 per diluted share, in the same
period one year ago. Included in fourth quarter 2012 net income are
gains on sale of real estate of $1.4 million, or $0.02 per share, and
real estate impairment of $2.1 million, or $0.03 per share. Included
in fourth quarter 2011 net income are gains on sale of real estate of
$40.9 million, or $0.62 per share, real estate impairment of $14.5
million, or $0.22 per share, and loss on extinguishment of debt of
$1.0 million, or $0.01 per share.

“We ended the year operationally on a steady note, with core FFO of
$0.47 in line with our expectations. Our balance sheet is strong, with
minimal maturities in 2013 and ample capacity to fund acquisition and
development opportunities in the coming months. We are looking forward
to executing our 2013 strategic initiatives,” said George F. “Skip”
McKenzie, President and Chief Executive Officer of WRIT.

Operating Results

The Company's overall portfolio Net Operating Income (“NOI”)(2)
was $51.3 million compared to $49.7 million in the same period one year
ago and $50.2 million in the third quarter of 2012. Overall portfolio
physical occupancy for the fourth quarter was 88.1%, compared to 90.8%
in the same period one year ago and 89.2% in the third quarter of 2012.

Same-store(3) portfolio physical occupancy for the fourth
quarter was 88.7%, compared to 91.5% in the same period one year ago.
Sequentially, same-store physical occupancy decreased 100 basis points
(bps) compared to the third quarter of 2012. Same-storeportfolio
NOI for the fourth quarter increased 1.2% and rental rate growth was
1.4% compared to the same period one year ago.

Office: 49.2% of Total NOI - Office properties' same-store NOI
for the fourth quarter decreased 1.1% compared to the same period one
year ago. Rental rate growth was 0.9% while same-store physical
occupancy decreased 430 bps to 84.9%. Sequentially, same-store
physical occupancy decreased 140 bps compared to the third quarter of
2012.

Retail: 20.0% of Total NOI - Retail properties' same-store NOI
for the fourth quarter increased 8.2% compared to the same period one
year ago. Included in fourth quarter 2011 results was a $0.01 per
diluted share charge related to a lawsuit with a former tenant at
Westminster Shopping Center. Rental rate growth was 0.3% while
same-store physical occupancy decreased 210 bps to 91.2%.
Sequentially, same-store physical occupancy decreased 160 bps compared
to the third quarter of 2012.

Multifamily: 16.3% of Total NOI - Multifamily properties'
same-store NOI for the fourth quarter increased 4.1% compared to the
same period one year ago. Rental rate growth was 4.1% while same-store
physical occupancy decreased 80 bps to 94.1%. Sequentially, same-store
physical occupancy decreased 70 bps compared to the third quarter of
2012.

Medical Office: 14.5% of Total NOI - Medical office properties'
same-store NOI for the fourth quarter decreased 3.1% compared to the
same period one year ago. Rental rate growth was 1.3% while same-store
physical occupancy decreased 140 bps to 89.1%. Sequentially,
same-store physical occupancy increased 110 bps compared to the third
quarter of 2012.

Leasing Activity

During the fourth quarter, WRIT signed commercial leases for 270,492
square feet with an average rental rate increase of 9.5% over expiring
lease rates on a GAAP basis, an average lease term of 6.2 years, tenant
improvement costs of $19.71 per square foot and leasing costs of $9.83
per square foot.

Rental rates for new and renewed office leases increased 11.8% to
$33.67 per square foot, with $26.06 per square foot in tenant
improvement costs and $12.72 per square foot in leasing costs.
Weighted average term for new and renewed leases was 6.2 years.

Rental rates for new and renewed retail leases increased 5.8% to
$20.64 per square foot, with $2.27 per square foot in tenant
improvement costs and $1.26 per square foot in leasing costs. Weighted
average term for new and renewed leases was 5.5 years.

Rental rates for new and renewed medical office leases increased 4.8%
to $35.03 per square foot, with $27.25 per square foot in tenant
improvement costs and $14.35 per square foot in leasing costs.
Weighted average term for new and renewed leases was 7.3 years.

Dispositions

In the fourth quarter, WRIT sold Plumtree Professional Center, a 33,000
square foot medical office building in Bel Air, Maryland, for $8.75
million and recorded a net book gain of $1.4 million. The property was
built in 1991 and acquired by WRIT as part of a portfolio acquisition in
2006. The unleveraged internal rate of return over the holding period
was 13%.

Financing Activity

In the fourth quarter, WRIT prepaid without penalty five mortgage notes
with an aggregate principal amount of $58.8 million, including 15005
Shady Grove Road, 9707 Medical Center Drive, 8501-8503 Arlington
Boulevard, 8505 Arlington Boulevard and Plumtree Professional Center.
The weighted average interest rate on these five notes was 5.43%.
Subsequent to quarter end, WRIT prepaid without penalty the West Gude
mortgage note, having a principal amount of $30.0 million and an
interest rate of 5.855%, primarily using borrowings from our unsecured
lines of credit.

Dividends

On December 31, 2012, WRIT paid a quarterly dividend of $0.30 per share.

Conference Call Information

The Conference Call for 4th Quarter Earnings is scheduled for
Thursday, February 14, 2013 at 2:00 P.M. Eastern time. Conference Call
access information is as follows:

USA Toll Free Number:

1-877-407-9205

International Toll Number:

1-201-689-8054

The instant replay of the Conference Call will be available until
February 28, 2013 at 11:59 P.M. Eastern time. Instant replay access
information is as follows:

USA Toll Free Number:

1-877-660-6853

International Toll Number:

1-201-612-7415

Conference ID:

406970

The live on-demand webcast of the Conference Call will be available on
the Investor section of WRIT's website at www.writ.com.
On-line playback of the webcast will be available for two weeks
following the Conference Call.

Note: WRIT's press releases and supplemental financial information are
available on the company website at www.writ.com
or by contacting Investor Relations at (301) 984-9400.

Certain statements in our earnings release and on our conference call
are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements involve known
and unknown risks, uncertainties, and other factors that may cause
actual results to differ materially. Such risks, uncertainties and other
factors include, but are not limited to, the potential for federal
government budget reductions, changes in general and local economic and
real estate market conditions, the timing and pricing of lease
transactions, the availability and cost of capital, fluctuations in
interest rates, tenants' financial conditions, levels of competition,
the effect of government regulation, the impact of newly adopted
accounting principles, and other risks and uncertainties detailed from
time to time in our filings with the SEC, including our 2011 Form 10-K
and our subsequent Quarterly Reports on Form 10-Q. We assume no
obligation to update or supplement forward-looking statements that
become untrue because of subsequent events.

(1) Funds From Operations (“FFO”) - The National Association
of Real Estate Investment Trusts, Inc. (“NAREIT”) defines FFO (April,
2002 White Paper) as net income (computed in accordance with generally
accepted accounting principles (“GAAP”)) excluding gains (or losses)
associated with sales of property, impairment of depreciable real estate
and real estate depreciation and amortization. FFO is a non-GAAP measure
and does not replace net income as a measure of performance or net cash
provided by operating activities as a measure of liquidity. We consider
FFO to be a standard supplemental measure for equity real estate
investment trusts (“REITs”) because it facilitates an understanding of
the operating performance of our properties without giving effect to
real estate depreciation and amortization, which historically assumes
that the value of real estate assets diminishes predictably over time.
Since real estate values have instead historically risen or fallen with
market conditions, we believe that FFO more accurately provides
investors an indication of our ability to incur and service debt, make
capital expenditures and fund other needs.

Core Funds From Operations (“Core FFO”) is calculated by adjusting FFO
for the following items (which we believe are not indicative of the
performance of WRIT's operating portfolio and affect the comparative
measurement of WRIT's operating performance over time): (1) gains or
losses on extinguishment of debt, (2) costs related to the acquisition
of properties, (3) severance expense related to corporate
reorganization, and (4) property impairments not already excluded from
FFO, as appropriate. These items can vary greatly from period to period,
depending upon the volume of our acquisition activity and debt
retirements, among other factors. We believe that by excluding these
items, Core FFO serves as a useful, supplementary measure of WRIT's
ability to incur and service debt and to distribute dividends to its
shareholders. Core FFO is a non-GAAP and non-standardized measure and
may be calculated differently by other REITs.

(2) Net Operating Income (“NOI”), defined as real estate
rental revenue less real estate expenses, is a non-GAAP measure. NOI is
calculated as net income, less non-real estate revenue and the results
of discontinued operations (including the gain on sale, if any), plus
interest expense, depreciation and amortization, general and
administrative expenses, acquisition costs and real estate impairment.
We provide NOI as a supplement to net income calculated in accordance
with GAAP. As such, it should not be considered an alternative to net
income as an indication of our operating performance. It is the primary
performance measure we use to assess the results of our operations at
the property level.

(3) For purposes of evaluating comparative operating
performance, we categorize our properties as “same-store” or
“non-same-store”.A same-store property was owned for the
entirety of the periods being evaluated and is stabilized from an
occupancy standpoint. A non-same-store property is one that was acquired
or placed into service during either of the periods being evaluated, or
is not stabilized from an occupancy standpoint.

(4) Funds Available for Distribution (“FAD”) is a non-GAAP
measure. It is calculated by subtracting from FFO (1) recurring
expenditures, tenant improvements and leasing costs that are capitalized
and amortized and are necessary to maintain our properties and revenue
stream and (2) straight-line rents, then adding (3) non-real estate
depreciation and amortization, (4) amortization of restricted share and
unit compensation, and adding or subtracting amortization of lease
intangibles, as appropriate. We consider FAD to be a measure of a REIT's
ability to incur and service debt and to distribute dividends to its
shareholders. FAD is a non-standardized measure and may be calculated
differently by other REITs.

Physical Occupancy Levels by Same-Store
Properties (i) and All Properties

Physical Occupancy

Same-Store Properties

All Properties

Segment

4th QTR

4th QTR

4th QTR

4th QTR

2012

2011

2012

2011

Multifamily

94.1

%

94.9

%

94.1

%

94.9

%

Office

84.9

%

89.2

%

84.5

%

89.0

%

Medical Office

89.1

%

90.5

%

85.6

%

86.5

%

Retail

91.2

%

93.3

%

91.2

%

93.3

%

Overall Portfolio

88.7

%

91.5

%

88.1

%

90.8

%

(i) Same-Store properties include all stabilized properties that were
owned for the entirety of the current and prior year reporting periods.
For Q4 2012 and Q4 2011, same-store properties exclude:

Multifamily Acquisitions: none;

Office Acquisition: Fairgate at Ballston;

Medical Office Acquisition: Lansdowne
Medical Office Building;

Retail Acquisitions: none.

Also excluded from Same-Store Properties in Q4 2011 and Q4 2010 are:

Held for Sale and Sold Properties: The
Atrium Building, 1700 Research Boulevard, Plumtree Medical Center,
Northern Virginia Industrial Park II, 6100 Columbia Park Road and Dulles
Business Park I and II.

WASHINGTON REAL ESTATE INVESTMENT TRUST

FINANCIAL HIGHLIGHTS

(In thousands, except per share data)

(Unaudited)

Three Months Ended December 31,

Year Ended December 31,

OPERATING RESULTS

2012

2011

2012

2011

Revenue

Real estate rental revenue

$

77,071

$

75,413

$

304,983

$

284,156

Expenses

Real estate expenses

25,791

25,666

103,276

95,342

Depreciation and amortization

26,131

25,029

103,067

91,805

Acquisition costs

90

36

234

3,607

Real estate impairment

2,097

14,526

2,097

14,526

General and administrative

4,545

4,140

15,488

15,728

58,654

69,397

224,162

221,008

Real estate operating income

18,417

6,016

80,821

63,148

Other income (expense):

Interest expense

(17,411

)

(16,142

)

(64,697

)

(66,214

)

Other income

242

258

975

1,144

Loss on extinguishment of debt

—

(976

)

—

(976

)

(17,169

)

(16,860

)

(63,722

)

(66,046

)

Income (loss) from continuing operations

1,248

(10,844

)

17,099

(2,898

)

Discontinued operations:

Income from operations of properties sold or held for sale

310

1,090

1,485

11,923

Income tax expense

—

—

—

(1,138

)

Gain on sale of real estate

1,400

40,852

5,124

97,491

Net income

2,958

31,098

23,708

105,378

Less: Income from operations attributable to noncontrolling
interests in subsidiaries

—

(9

)

—

(94

)

Less: Gain on sale of real estate attributable to noncontrolling
interests in subsidiaries

—

(400

)

—

(400

)

Net income attributable to the controlling interests

$

2,958

$

30,689

$

23,708

$

104,884

Income (loss) from continuing operations attributable to the
controlling interests

$

1,248

$

(10,844

)

$

17,099

$

(2,898

)

Continuing operations real estate depreciation and amortization

26,131

25,029

103,067

91,805

Funds from continuing operations (1)

27,379

14,185

120,166

88,907

Discontinued Operations:

Income from operations of properties sold or held for sale

310

1,090

1,485

11,923

Income from operations attributable to noncontrolling interests in
subsidiaries

—

(9

)

—

(94

)

Real estate impairment

—

—

—

599

Real estate depreciation and amortization

—

369

867

8,723

Funds from discontinued operations

310

1,450

2,352

21,151

Funds from operations (1)

$

27,689

$

15,635

$

122,518

$

110,058

Tenant improvements

(4,901

)

(5,100

)

(16,540

)

(11,889

)

External and internal leasing commissions capitalized

(2,334

)

(1,485

)

(9,157

)

(8,692

)

Recurring capital improvements

(1,414

)

(1,626

)

(7,307

)

(7,537

)

Straight-line rents, net

(738

)

(776

)

(3,265

)

(2,734

)

Non-cash fair value interest expense

253

(53

)

926

462

Non real estate depreciation & amortization of debt costs

911

845

3,854

3,733

Amortization of lease intangibles, net

41

(32

)

6

(1,052

)

Amortization and expensing of restricted share and unit compensation

1,842

1,459

5,786

5,580

Real estate impairment

2,097

14,526

2,097

14,526

Funds available for distribution(4)

$

23,446

$

23,393

$

98,918

$

102,455

Note: Certain prior period amounts have been reclassified to conform
to the current presentation.

Three Months Ended December 31,

Year Ended December 31,

Per share data:

2012

2011

2012

2011

Income (loss) from continuing operations

(Basic)

$

0.02

$

(0.16

)

$

0.25

$

(0.04

)

(Diluted)

$

0.02

$

(0.16

)

$

0.25

$

(0.04

)

Net income attributable to the controlling interests

(Basic)

$

0.04

$

0.46

$

0.35

$

1.58

(Diluted)

$

0.04

$

0.46

$

0.35

$

1.58

Funds from continuing operations

(Basic)

$

0.41

$

0.21

$

1.81

$

1.35

(Diluted)

$

0.41

$

0.21

$

1.80

$

1.35

Funds from operations

(Basic)

$

0.42

$

0.23

$

1.84

$

1.66

(Diluted)

$

0.42

$

0.23

$

1.84

$

1.66

Dividends paid

$

0.3000

$

0.4338

$

1.4675

$

1.7350

Weighted average shares outstanding

66,273

66,069

66,239

65,982

Fully diluted weighted average shares outstanding

66,416

66,069

66,376

65,982

WASHINGTON REAL ESTATE INVESTMENT TRUST

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

December 31,

2012

2011

Assets

Land

$

483,198

$

465,445

Income producing property

1,979,348

1,899,440

2,462,546

2,364,885

Accumulated depreciation and amortization

(604,614

)

(521,503

)

Net income producing property

1,857,932

1,843,382

Development in progress

49,135

43,089

Total real estate held for investment, net

1,907,067

1,886,471

Investment in real estate sold or held for sale

11,528

27,669

Cash and cash equivalents

19,324

12,765

Restricted cash

14,582

19,229

Rents and other receivables, net of allowance for doubtful accounts
of $10,958 and $8,683, respectively